Hungary Ponders Payroll Tax Cut

by Ulrika Lomas, Tax-News.com, Brussels

19 August 2016

The Hungarian Government has hinted that it is considering reducing employer social security contributions, although its ability is said to be constrained by a lack of fiscal space.

Ahead of the first meeting of the newly formed economic cabinet, which took
place on August 16 to discuss a "50-point agenda," a Ministry for
National Economy statement said that certain "employment issues" could
be resolved through lowering payroll taxes.

However, according to the ministry, the Government's "maneuvering room
is limited" because social security contributions cover both healthcare
and pension provision.

"It has taken several years of hard work to balance the healthcare and
pension funds. Expenditures no longer exceed revenues and this painfully gained
balance should not be jeopardized," the ministry said.

Nevertheless, the ministry revealed that it is "examining when and to what extent contributions should be reduced."

Social security contributions in Hungary are among the highest in Europe. Presently,
employers must pay a 27 percent social tax on an employee's gross wages.

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